Kelvin Meeks: June 2021

"Why I Am a Crypto Curmudgeon"

https://www.barrons.com/articles/why-i-am-a-crypto-curmudgeon-51623184688

"You don’t ask my advice on which number to put your chips on when you play roulette in Las Vegas, I told them. Cryptocurrencies fall into the same category."
"No matter what asset class you are discussing, it feels a bit “toppy” when people far removed from investing start asking you for advice about it, all at once."
"just because a technology is useful, has a lot of applications, and is widely accepted doesn’t automatically mean that you can use it to create a genuine currency."
"Until recently Bitcoin looked like a clear winner. Even Elon Musk was touting it, and Tesla bought $1.5 billion worth. Then Musk also shared with us his love of Dogecoin—a literal joke of a currency—and it exploded in price. A few weeks later Musk realized that Bitcoin is a “Beanie Baby that runs on coal,” as Bill Maher put it."
"Because of Bitcoin’s decentralized nature, solving useless math problems to mine more coins consumes more electricity than Argentina."
" If you are an ESG-oriented pension and don’t want to own Exxon (“evil Big Oil”), I want to see how you justify owning Bitcoin. If you adjust for CO2 production in relation to societal utility, Bitcoin is arguably worse for the environment than internal combustion engine cars (at least cars get you places)."
"For the energy cost of processing one Bitcoin, Visa can process 810,000 transactions, about 370 times faster."
"Cryptocurrencies are a clear and present danger to the U.S. dollar. There is a high probability that the U.S. government will outlaw the use of cryptos as currencies. Sounds far-fetched? The U.S. government did it with gold in 1933. India is threatening to ban Bitcoin. South Korea is clamping down."

https://mobile.twitter.com/jwz/status/1478022085737803776

"Everyone involved in the project should be witheringly ashamed of this decision to partner with planet-incinerating Ponzi grifters"

You just have to ask a few simple questions to get to clarity here:

1. What is the maximum transactions per second (tps) capacity for any given crypto platform? Now, compare that to the average tps for other types of financial transactions that are processed today across many types of businesses (e.g., transportation, hotels, restaurants, retail stores, financial markets, banking transactions, credit/debit card transactions, etc.)

2. What happens if a fraudulent transaction happens? How am I protected? What agency or regulations will protect my investments?

3. How could an immutable blockchain crypto approach - possibly be abused by authoritarian governments to monitor/oppress people?

4. What is the total energy utilization for a given crypto platform? If it exceeds the total energy utilization of a small country - you might want to consider the harmful impact of expanding that platform's adoption - to climate change.

Interesting Viewpoint Articles

https://web3isgoinggreat.com/

Stephen Diehl [@smdiehl; blog]

Web3 is Bullshit

2020

2022

2022-04-06 Is Crypto Re-Creating the 2008 Financial Crisis? (The Atlantic)

2022-04-25 Sam Bankman-Fried Described Yield Farming and Left Matt Levine Stunned
2022-04-28 Warren Buffett gives his most expansive explanation for why he doesn’t believe in Bitcoin
2022-05-01 Berkshire Hathaway vice chair labels bitcoin ‘stupid’ and ‘evil’
2022-05-13 Why This Computer Scientist Says All Cryptocurrency Should “Die in a Fire”
2022-05-16 Bitcoin has no future as a payments network, says FTX chief
2022-05-16 Stablecoins Not Ready for Consumer Payments, US Watchdog Says
2022-05-19 The Crypto Crash Feels Amazing
2022-05-19 Bill Gates Explains Why He Doesn’t Own Any Cryptocurrency

“I like investing in things that have valuable output. The value of companies is based on how they make great products. The value of crypto is just what some other person decides someone else will pay for it so not adding to society like other investments,”

2022-05-28 Why Does Bitcoin Use So Much Energy?
2022-06-01 U.S. Senate: Letter in Support of Responsible Fintech Policy
2022-06-03 FTC says victims of crypto scams have lost more than $1 billion since 2021
2022-06-03 Crypto firms say thousands of digital currencies will collapse, compare market to early dotcom days
2022-06-03 Crypto Investors Are Dumping Ethereum For Bitcoin As Risk Aversion Deepens
2022-06-13 Here’s What The Crypto ‘Bloodbath’ Means For The Stock Market (It’s Not Good)
Crypto’s frozen mystery: The fate of billions in Celsius deposits

"He laid out his mission of “unbanking,” in which investors can deposit cryptocurrency outside the traditional financial system. Central to the pitch were unusually high yields for depositors in his Celsius Network — as much as 30 percent — made possible, the New York-based Mashinsky explained, because their money would be loaned out at high rates to those needing it for short-term crypto investments."
Two words come to mind..."Ponzi Scheme"?

"In a Ponzi scheme, a con artist offers investments that promise very high returns with little or no risk to their victims. The returns are said to originate from a business or a secret idea run by the con artist. In reality, the business does not exist or the idea does not work. The con artist pays the high returns promised to his earlier investors by using the money obtained from later investors. Instead of engaging in a legitimate business activity, the con artist attempts to attract new investors to make the payments that were promised to earlier investors"

"With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes collapse."